U.S. stocks opened lower on Tuesday (November 20) as a credit downgrade of France by ratings agency Moody's and weak earnings by Hewlett-Packard halted a two-day rally.
Housing starts rose to their highest rate in more than four years in October, suggesting the housing market recovery was improving, even though permits for future construction fell.
September's starts were revised down to show a 863,000-unit pace instead of the previously reported 872,000 units. Economists had expected groundbreaking to slow to a 840,000-unit rate last month.The department said Hurricane Sandy had a minimal impact on the data.
Moody's downgrade of France's debt, from AAA to Aa1 is the second cut by a large rating agency. The third, Fitch, has said it will announce its decision on its triple-A rating for France next year.
With France's 2 trillion euro economy teetering on the brink of recession, French President Francois Hollande surprised many this month by unveiling measures to spur industrial competitiveness, chief among them the granting of 20 billion euros in annual tax relief to companies, equivalent to a six percent cut in labour costs.
The government had already announced 30 billion euros in budget savings next year in an effort to meet its deficit goal and is working on reforms to labour laws to enable companies to hire and fire more easily with economic swings.